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Exxon 15, United States 12, Washington 7, Lee Raymond 6, U.s. 6, America 4, Maryland 3, Steve 3, Valdez 3, Bp 3, Apple 3, France 2, Alan Greenspan 2, Us 2, Mexico 2, Indonesia 2, Tony Blair 2, Canada 2, Obama 2, Raymond 1,
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    January 27, 2013
    12:00 - 1:00am EST  

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gratuitously. . . >> host: i know the reporter who dealt with exxonmobil a good chunk of her career, how difficult it probably was to probe this company.
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let's start there. why exxonmobil? how did you come to this subject? i know, you covered getty oil, but why this company and how did it differ from some of your other subjects, like the bin ladens? >> guest: and it's an interesting -- to me an interesting journey. i started out as a business reporter on wall street when i was very young, and then i went abroad and worked more on international subjects, and after 9/11 i wrote about the origins of 9/11 attacks in 20 years of american covert policy in afghanistan and ghost wars, and then after that was over, i thought i want to keep writing about america and the world after 9/11. this sort of asymmetric strange groping we have as a country to understand what the attacks are about, what they meant to the united states, what our relationship with the middle east was. and that led to the bin ladens,
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a book intended to be about saudi arabia and how complicated for this generation of oil broomers to come of age in the 70s when the kingdom was awash in wealth and had to all go out and buy identities in the world, and unand one of them became a notorious terrorist do and the others moved to florida. and when i finished with that project i wanted to write about oil and american power in the post-9/11 context, and i started out -- actually the book about exxonmobil began as a book about oil and geopolitics. i wanted to essentially take the prize, the book by dany ergen that had inspired me and update it. i thought of the prize as a great work of nonfiction about the era of oil that was an era of expansion and discovery, and i wanted to write a book about global oil in the era of limits
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and constraintses and climates and the rest of it. so i started out on that kind of open framework and got -- thought i needed a subject, company. and once i came to that conclusion, then for an american audience i thought exxonmobil was the only choice. i backed into them as a subject. but i didn't realize what i was getting into. i didn't know how closed they were. how difficult to report on. i thought they would be a normal corporation. i also didn't understand that much about their distinctive internal culture. a lot of the three and a half years that remain was about discovering what exxonmobil really was. >> host: and if during the course of this reporting, the bp spill, and all were you at that point -- did i pick the wrong company? >> guest: i had mixed feelings.
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i joked to an award that describes what journalists people feel when other people suffer but you get an ending to your back. but an environmental disaster, even though it wasn't exxonmobil0s responsibility, it provided a bookend for the valdez story. a story they tell themselves. they tell themselves the story they were scared straight built the valdez, they reformed and a lot of who they are trace to the reforms that started with that accident. i thought the deep water horizon accident could be a book end. at one stage when i was wrestling how to make this book more specific, i did consider a dual narrative of exxonmobil and bp, and my great regret is i should have done that. but it would have been too much reporting and would have never gotten underneath the surface. >> host: let's talk about that. that's an interesting point. starting the book out with
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valdez and making it new, to be honest. and then ending with the deep water horizon dollars in the gulf of mexico in april 2010. as a person that really delved into the -- read the transcript from the exxon valdez incident. did you see any parallels in i did a little best. i covered valdez as a reporter. i was young then. i did cover deep water horizon, and your scrippage of valdez and exxon's response it to, i did see some -- almost seemed like bp took page out of their playbook. did you see that at all as you were seeing the coverage of bp? >> guest: definitely parallels. a couple -- you could probably list even more than come to my mine. but a few that come to mind are in the decade up to valdez there were warning signs that exxon was not operating in a consistent manner in a way that
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would give you the reassurance that subject to catastrophic accident could not take place. in the decade before the valdez exxon cut 80,000 out of 180,000 employees. they re-organized their entire safety department, entire environmental department, and obviously the fact that a tanker captain with a drinking problem, who had dui arrests, was still in this job, making more than $100,000 a year in 1,989-dollar h dollars, that's not the exxonmobil you expect today. so there was a series of warning signs that culminated in the accident. same was true of bp. i don't know what you would say but i had the impression from people in the industry that bp's record as a weak operator and the texas city plant, that osha record, the fact they basically had a culture and a strategy that emphasized financial
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engineering at the expense of operating discipline, was pretty well known in the industry. and i came to the conclusion, after talking to people for three or four year if you called up people in the oil industry on the morning of deep water horizon and said to them the following thing has happened. who do you think was operatig the platform? jo would have gotten a strong majority for bp. the second parallel was the preparation for actually mitigating the disaster. in both cases there were a lot of paper plans saying we can handle that, and the reality is they were not able to do so. and then the kind of public relations narrative -- i'm learning how to deal with all of the communities and traumas. i think probably bp had the benefit of 20 years of learning about corporate crisis management that exxon -- in those days they the philosophy
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how to community and tell people you'll make things right on tv. that wasn't the strategy in exxon's day. but anyway. >> host: i agree. i think the aftermath from -- strikes me more than what happened before both of disasters in terms of, as a reporter after the deep water horizon, bp gobbled up every expert on any kind of -- of -- -- couldn't find an expert to save your life that wasn't on bp's table. the control that emanates through this book. i think emanated after bp in terms of controlling the message, controlling access to people independently, talk to reporters about what happened, and very technical subject, again. so you go everywhere in this book. you globe trot. and you also tackle numerous environmental issues, from
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global warming to obviously the spill at sea of a tanker, to making underground storage tanks -- always having connections to oil company because it's integrated and controls oil from cradle to grave. how did you pick out the anecdote. the company goes back to standard oil days and theirs a treasure referring to and as a reporter i know it's difficult to use the sifter. how did you pick out the anecdotes for the book? >> guest: i started out with a map -- once i chose exxonmobil as a subject, i took looked at the map where they owned oil and gas, and i skid myself, why are they there? and then i became interested in traveling across that map, because as you pointed out earlier, there are close --
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they're a closed subject. they were not excited to learn i was doing this book. they didn't volunteer to be written about. they handled my inquiries in a professional way, but they didn't really cooperate very much. they would say that relative to some projects they cooperated more than usual, but from the perspective of the amibition of the book, while it was helpful everything they offered of, it was limited. so i had to good outside-in, so i started with the map. and the first user i traveled a fair amount out into the field where they operated. tried to understand they're role in the world, their sense of themselves as an independent sovereign, how they operate on the ground. why are they in some of these countries, learning about reserve replacement challenges and why equity oil in weak states evolved as part of their portfolio. and so on. then i came back to the united states and thought, have a pretty good first draft sense of how they operate abroad but i really need to concentrate on
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their washington strategy and their lobbying and political strategy. so, i then turned to the tools you use as a reporter to go outside-in, in the united states, which is basically lawsuits and disclosures. so, i had filed freedom of information requests for overseas work, but for american work, i looked a their lobbying disclosure, and -- in the summer of 2008 they were all over the subject. so it was really the data they that basically said there's got to be something here, and then on the lawsuit, they get sued by everybody over everything, and so it's a great tool of reporting, to be able to look at civil litigation, because in those cases, records and testimony are produced, even if exxonmobil's policy is never to get interviewed, their executives have to testify if
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they choose to contest them. so i was looking for cases that told structural deep stories that were points of entry into the corporation, and one i found was this gasoline spill in maryland where i realized, searching the litigation records, started with mtbe and fought my way down and realized there was a huge trial record around what had been one of the largest gasoline spills in an area that depended on fresh ground water supplies through aquifers, so it was a dangerous spill in an environmental sense. and it had gone to trial and the trial was over and there was this massive record of testimony by exxonmobil executives, plus documents that had been price and, it was just a gift. i went trade into the retailingg and downstream division of exxonmobil in this trial record in a way i could never have done in interviewing0. opportunistic is the short answer how you choose the subjects. you keep looking on the map and suddenly see the way to tell the story. >> host: what is interesting is
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despite how broad they are in term office geography and subject matter, the lesson is the same over and over again. which is -- i think also comports with the public's perception of exxon, which is this company that is all-powerful, that you don't want to mess with, putting colloquially. anything you came across surprise you or fit outside of that narrative? seems to me the book -- all the stories kind of come back to that in different ways. you're right. each one has a different kind of take on it. but the sum of its parts is this image of the company that really comports with everybody in their gut feels. they are who they are, and the reason that it's true across settings, that the same kind of decisionmaking and the same kind of culture and in-laws,
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rigidity, focus, consistency, is present in indonesia and equatorial begin knee and suburban maryland and the washington offices, because they have constructed a global system, and global policies that are so unified and so codified and transcribed down their channel of system, and everybody who work atlantis gets up in the morning and is reading out of the same playbook. almost like a military operation or a sports team that is exceptionally well organized around the same playbook. and i think they're kind of self-conscious about that military metaphor. they're unusual among corporations in that everyone who is at the top grew up together. if you took the top 100 publicly traded corporations in the united states and you chose the top 40 jobs at each of those corporations corporations and mapped who the
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people were, there would be a significant number of people who came from a competing company laterally, moved over, or came from another interest, and emcame in with reforming ideas. so morse corporations are informed at the top by at least some outside perspective. but in exxonmobil everyone comes up from college, graduate school. and if you were selected for management tracking, you grow up together over for 40 years, and it's like the marine corps, you don't become a marine corps general by having a successful career at ibm and then wear two stars on your showered. so what you observe end as a reader of the book, which is that whether it's a lawsuit in venezuela or a civil war in indonesia or a gas leak spill in maryland, the stories all seem to end the same way. enforcing their will. and there's a reason for that. that's their system. >> host: late in the book -- i think that, as a person that's covered energy and environment for as long as i have -- this
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surprised me. you get into hydraulic fracturing which is now all over the news. today going to put out rauls for fracking on public lands. and you almost -- and you almost make the case that corporation prosecute -- that corporate philosophy gave them a blind spot when it came to high drawlic fracturing, and you make an amazing point that rex tillerton, as a young engineer at the company, actually was using the technique and so do you think in that one case in the fracking case, that corporate philosophy of, let's manage our risks, make sure we make a certain return on what we do -- hinder them from tapping into what is now this huge gas, huge economic opportunity in this country with natural gas? >> guest: they were slow but
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they're often slow and then they're dissive. so they get to places late and then buy their way in. that's their pattern. never had a great reputation as the greatest spoil goss discoverers. i'm sure they have some wins and a story they tell. thes about successes in exploration, but they have some, but by and large, their strength is financial strong so they have more cash than anybody else, more discipline, and if they fail to discover something for themselves they can buy it. that's what they did with fracking. they had been' trying to develop a natural gas strategy as conventional gas emerged after 2005 and 2006, increasingly looked like a real opportunity, and they were going out and doing the kind of land games and buying up leases, putting it together one patch at a time and trying to build something. but at their scale, for them to be a player, they needed to come in big. so they fought fto in 2010.
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one thing that is interesting that the fracking story -- now they're the largest producer of unconventional -- >> host: of course they are. >> guest: if you have $40 billion you can lay down, you can become the largest of almost anything. what is interesting -- i wonder what you think about this. i think of climate as a challenge of climate legislation, carbon pricing, as an analogy goes strategic challenge they faced in an earlier generation where they dealt with resistance to their investments and their thinking with a pretty aggressive strategy. now, fracking is not just a business challenge, not just a geological challenge or engineering challenge. it's also a political challenge. there's an enormous amount of anxiety billing up in the country about these fracking techniques and their environmental consequences, their land use consequences, the
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unknown, inducing earthquakes in places that didn't have them previously. if exxonmobil becomes the poster shield of the rigid, very corporate, very kind of stiff and profit-driven approach to these challenges, then may strategically have a problem over time. can they actually adapt themselves to the kind of trust-building and political coalition-building that will prove durable or will they take their systems approach, our way or the highway, and end up defeating. thes in some respect? they could end up with a tougher public response to fracking than they would otherwise get if they were -- >> host: or will they align. thes with the other companies that are doing this? they're the odd man out. they're kind of pursuing what they want to pursue and doing it their way, and take nothing
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punches and make nothing excuses for it. which brings me -- i had a conversation this morning with allen jeffreys, who i know you him well. the chief spokesman for exxonmobil. i asked him about the book, and i wanted to get a reaction to his reaction from you, which i think you'll find very ex-son mobile-esque. he basically said, essentially how we see the book is telling the story of exxonmobil's commitment to safety and community. it may not be a popular or fashionable, these conservative approaches, but we think these are good qualities of a company of this type. it's like, that's how they are, take it. and obviously that would not surprise you. as you probably know, poured through this book. what is your response? >> i appreciate he is dealing
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with it in a professional way. they basically -- about media, journalists, political opposition, environmentalist groups, they basically stay in their channel, and that's what he is doing. so he is saying, we are who we are. that's essentially their strategic position. sometimes we are who we are feels like a defensive crouch, and that gets to this fracking question. can you really be -- have this strength of the operating system, which are considerable -- they're safety driven, they're focused on operating excellence and they have a pretty good reputation in the business as project operators. i with wanted someone to develop our oil and the project to come in on time, on budget, and get paid early, we would definitely entertain their power point presentation because they have a record of project management that is good. where they get into trouble is where they extrapolate these
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operating systems, this rigidity into political affairs, you know, this human factor -- >> host: things that. >> guest: things made up of social change. and they're on record as a social entity themselves, as a corporation, on the promotion of women, on diversity, on responding to the kind of world that we live in. it's not great. and you can say these conservative values are out of fashion but we think they're powerful, that's fine if you're talking about safety at the work place. but can they succeed with this strategy in a world where they're so closed to the changing social makeup of -- who is the educated work force in the united states anymore? mostly women, more and more diverse, and i you work at exxonmobil and go home to your family thanksgiving dinner and say i work at exxonmobil
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and half your cousins and your brothers look at you in disdain or worry, that's not a wing strategy over 30 years. so something has to give, i think. i'm not sure they think that, though. >> host: that's one of my questions, too. is that it seems to me that kind of, we are who we are and take it or leave it, don't care what everybody else thinks about that -- has that backfired on them? seems that could have been a force to cultivate more distrust and distaste, and help make them, as you say in the book, public enemy number one at pointness their history. >> guest: yeah. well, it's a great question and a kind of complicated one. i think one of my goals as a reporter was to try to understand as best i could and to think about what is it like to be so unpopular? does it matter? their default view, doesn't matter. just like allen's statement to you, we are who we are.
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but in truth i think there are consequences. part is talent recruitment and retention in the real world, a world of the arab spring generation. you can't get away with being disdained by everybody and hold your scientific and ecological illinois. scientist are independent people. some may be willing to adapt to the economic rewards of a career at a place like exxonmobil but not if it doesn't feel like an open and changing place. b., it's -- if you only have one way of living in the world and problems and risk management are getting more and more diverse, you -- you can't afford to go into communities that already have a presumption you're evil, and show up at a jury trial -- yes, they can appeal all these verdicts, billion dollar verdicts and eventually get them knocked down to zero, but do you want to go into every jury setting and know you have to overcome a presumption you're
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evil? i do think there are consequences. and -- but the problem from their perspective is, let's think of a way out of this interesting to one of the things they did was say, let's go back to history. is there some golden age of oil industry popularity we could model as a more winning strategy? the answer is, no. so the base quick question of, if we are who we are, is there really a way to communicate about that, that will change anybody's mind? just putting lipstick on the pig as they say in the p.r. business? shouldn't we be straightforward and have a strategy that says, we are who we are, again and again, and hope that allows enough people to come into engagement with us to -- that's how it's done. >> host: talking to our business writer in new york, and we were talking about -- i said, hey, i'm interviewing steve. any questions for him? he brought up apple.
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and apple is now more valuable than exxonmobil. it's also secretive. also thin-skinned. but apple is cool. >> guest: exactly. >> host: everybody likes apple. do you -- it's kind of a two-parter. do you think exxonmobil's strategy has tarnished the rest of the oil business, and every in big oil is bad, and do you think it's spread to other companies and in the case of apple, seems to be thin-skinned and controlling and secretive and still hip and cool and people leak you. >> guest: i went back and looked at the top five corporations in the united states from 1949 to the present. and ex-son is always on the list. and the companies around rise and fall. where the companies in the '50s that were number one and two, u.s. steel, don't exist
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anymore. you look at today, apple and exxonmobil are one and two. ten years ago it was exxonmobil and wal-mart, microsoft is always in the mix. but 50 users from now, which one do you think is more likely to be around, exxonmobil or apple? that's one question. i read the jobs biography, and it is striking, both how completely different and how similar apple is to exxonmobil. thinking what a country. only the united states could produce both apple and exxonmobil. on the one hand, apple is a completely california-bread, creative, 60s -- and steve jobs used to go into interviews and ask serious job candidates if they had ever done lsd in the hopes they answer would be yes. if you go to exxonmobil, it's take this cup and provide us a drug test. on the one hand, they're very
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different and on the other hand there are these similarities. they're both closed systems, a command management, beth are driven by a desire to control their environment. steve jobs desperately wanted to control every element of the customer's experience, every element hoff the design, and they both were not good partners. they really didn't believe in partnership. they believed in the advantages of total control, and that makes them secretive because it's -- the secrecy follows the desire for control, not the secrecy is an end in itself. so, it's fascinating. the other point about exxonmobil and its unpopularity i came to think about over time is, most big industrialized democracies, because of the nature of our energy economy, they all have big state oil companies. bp, and mexico, and most of the states have privatized them but
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even bp -- were article shatly stalestate owned as recent as the 1980s, exxonmobil is our state oil company. they're a much more coherent expression of our national energy policy then the federal government is, and they're just as powerful relative to the state as tal is so france and even more. so only in america would we have a state oil company that lives in opposition to the state in which it resides. rex tillerson recently told scouting magazine his favorite book is atlas shrugged by ayn rand, and it suggests an attitude of skepticism toward the government that is peculiar. now, a company in france or italy or britain would be -- would have all again to the same universities as the president of the united states, they would be buddies and a locking sense of world view and maybe even,s they would work arm in arm with the
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french government abroad in order to secure they're -- their interests, but this country, we're skeptical of our government, and the irony is we're also skeptical of concentrated power. so exxonmobil is an institution with enormous concentrated power. the chief executive reads a book that is basically about the dangers of concentrated power and celebrates it. so we're a funny country. >> host: one of the things that came out that i think is interesting, going to what you said about their influence on washington. it was actually really fascinating because out of one side of their mouth they say they don't want to play ball, and yet they're playing ball harder than some others in some cases, with direct lines, for instance, during the lee raymond days to dick cheney and call on washington when it helps them to get them out of a geo political conflict. one thing is interesting, it
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talks in here about politicians getting it wrong. that's -- it's even more apt today. here it is. a quote from tillerson. the global free market for energy provides effective means of achieving u.s. energy -- the theory doesn't matter where you get oil from, as long as you get more spoil put it in the bathtub and we have more supply. in the noble market the nationality is little relevance. energy made in america is not as important as energy simply made whether it's most economic. >> guest: right. >> host: yet exxonmobil has carried that message for a long time, and goes back to raymond, and tillerson, obviously communicating it to a lot of the republican allies to make the point that their lobbying is heavily skewed to the republicans in the party. yet that's not the message you're hearing today. you're hearing a very, almost resource nationalist approach to
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u.s. domestic energy production, a la venezuela. >> guest: and exxonmobil is not too embarrassed to join in on that. >> host: it's kind of shocking to me, and i'm asking for an explanation here -- how can this all-powerful company with huge influence, not have changed that political discourse to make it actually more adhering the facts of how a global oil market works? they have to engage it in. >> guest: they have had influence on the elites in the united states, an intense education campaign to bring informed influentials in government, around government, through their conversation about how the global oil markets actually work. most politicians don't have time or interest to study in depth these complexities, and one of the executive is interviewed told me that one of the world leaders who understood best how
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the oil markets work, nationalism, though it can be relevant is not what it seems, energy independence, was tony blair, and this executive was talking to tony blair and he said you're one of the few people who run the government who actually understands how the oil markets work. isn't that a shame, and blair supposedly said you want want all the other politicians in the world to know because they would think they can do something about it. >> that stuck in my mind. that's what is happening in washington on both parties. both parties are trying to kind of get a handle and show that they're reacting to gasoline prices when in effect they have very little power over gasoline prices. >> guest: exactly. but this question of what are the benefits of energy independence or what is energy independence mean? even though the way it's used in political campaigns is frustrating because it's so sort of divorced from the actual subject matter, but there's a real subject there that is
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important, and interesting, and it's changing, and exxonmobil's position in the quest for energy independence is also changing, because basically while it's true that being a net exporter or a net importer of oil is not really the right way to think about energy security, because everybody is a price-taker, doesn't matter whether you're selling or buying, the price is a globe price. that's not true of natural gas. which is more regionally priced, and there's been some evolution toward a global integrated gas market but we're not there yet. and so in the united states, if we have onshore natural gas that is really cheap for a long period of time that could make a big difference to the economy and could reduce our cost of manufacturing, could change our energy mix in a way that is favorable in response to climate change, and while being a net importer or a net exporter may not matter in some of the way
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politicians talk about it, it does matter to our balance of trade to the amount of dollars net-net we send abroad to unfriendly regimes versus what we keep at home to reinvest. so if we do shift towards more energy independence, whether you call it nationalistic language or economic language -- there will be advantages. they're just not the same -- not the advantages that politicians often describe. >> host: now, one of the other current events i was thinking about in reading this book, was going back to the days of iron, lee raymond -- a brilliant chapter. exxon has shunned alternatives. this is oil. and they don't want to hear about hydrogen for cars, what have you, and they also -- excellent point, as an energy reporter, how people mix the electricity side of energy production with -- right.
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i couldn't help think, there's places in the book where lee raymond talks into the ear of alan greenspan and alan greenspan is on the hill and saying lee raymond's speech. and itsen solyndra, the solar company that grabbed headlines and failed. if big oil was behind that, given that their animosity towards kind of renewables and the subsidies renewables require. evidence of that? not making making the bad loan t fanned the flames of the criticism? >> guest: the american petroleum institute, a trade group in washington, made their spunup communications machine that seizes every opportunity and they're political allies did the same thing. but i think that the underlying question about alternatives and exxonmobil is, they're a corporation, they can pursue
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whatever business strategy they want. the question is, as a country, do we want to create subsidies and incentives for a shift to alternatives and a loan program that ended up with sew lynn contract providing it, why wouldn't we? if you look at it, we have been talking about how everybody in this country shares an interest in the lowest cost energy possible, consistent with a sustainable environment. that's the dilemma. you want the lowest cost energy but you also want to achieve your environmental goals. we may not define those goals the same way but if you talk about a rapid shift and costly shift from cheap coal and oil and gas, to more expensive but cleaner renewables, you better have a good reason to do that. now, the reason that is the most compelling in the world we live in today is climate. if you -- so if you believe, as i do -- i find 97% of mine stream scientists and their warnings and their findings -- entirely convincing.
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so, if you believe that, now you have a reason to endure short-term costs for long-term game. long-term gain. but if you want to convince the public there's no risk, the case gets harder, which is why exxonmobil's resistance to the basic finding of climate science, is so damaging, because there is a residue of doubt in the public about the the validity of climate science, and scientists tell there is shouldn't be such doubt. why is there? these interested parties funded a campaign, a communications campaign to clamp that down. the american people are adults and entitled to their own opinion but that campaign clearly was influential. >> host: also, i thought that was a really interesting part of the book. you make -- i don't want to put words in your mouth. to me it read almost as if exxon invent vented thatting extra. exxon was a company that really was in the business of putting
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in scientific doubt. i love the part with the noaa scientists on niches of the put sound and they're being tagged by a yacht of exxonmobil hired scientist whose want to know what they're up to and criticize their methods eventually, trying to cast doubt on the science, that the oil was still there after all the years. and that tactic now seems rampant in our political culture. as a reporter that pays attention closely, you know looking at -- you are now looking at -- the science of climate change, the theory held by many people, valid their riz now you're seeing it in areas that were almost lock solid. there's politicians on the floor talking about the linkage between smog and asthma. there's people that are questioning the cost benefit analysis of the epa when it
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drafts regulations. do you -- do you look at exxon as kind of tracking that and do you like, hey, exxon is responsible for that kind of tactic? it seems now it's a very community one. let's not talk about the regulations. let's talk about something we're trying to address. >> guest: i think they have a responsibility for some of that, and that really were a distinct stiff investor in that specific strategy after quioto. when the quioto accords were signed there was a lot of opposition them in the united states, and in the industrialized world, on economic ground, fairness grounds. some of it was about is the science that urgent that we need to impose these costs on ourselves? there were -- but there war a lot of different groups that opposed quioto for those incentive reasons but exxonmobil was very unusual, in my judgment in the aggression they brought the science part of the campaign.
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really funding groups whose principle activity was to communicate, as nonscientist, a narrative of doubt about what was emerging at a main stream climate science, and that is, i'm afraid, a tactic that is more and more present where science and public policy intersect, and it's dangerous, because our whole progress as an industrialized democracy depends on an honest argument about science and the public good. and if we're going to have -- especially these fractured media times -- a completely polluted argument where the public -- even the public trying to act in good faith isn't sure who to believe about what. we're going to end up damaging our society. >> host: now, this book makes clear that exxon is almost an impenetrable fortress as a company. when you get to climate change
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and -- i'm biased here because i'm a climate junky. >> really seemed this scares them. there's this great -- until then there was only one unexpected development. one black swan intervention that could shift the curve of rising global oil demand, which obviously exxon enjoys. those are my words. a decision by government to limit green house gas emissions by heavily taxing or tapping the use of carbon based fuels. is that a fair estimation? that issue, because of what it could do to oil -- is what really kind of had them shaking in their boots. >> guest: it was a combination how a rare -- they had overcome the previous systemic threats to oil production in the world, which were spills and environmental damage and the seepage of oil into water and
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drinking supplies and air pollution, all of that had been more or less brought into a sustainable compact of regulator and regulated, and they had been themselves adopted -- they accepted the validity of these environmental goals when it comes to spills and air pollution and so target. that they had imposed costs on. thes in order to build the sustainable compacts so just at the moment when they have cruising speed on the other environmental issues that arose in the first three or four decades of the order world, now comes this an distract globalham challenge to the prime si of fossil fuels in our system. i think that was one factor. lee raymond personally, as a trained chemical engineer and a very direct and determined executive, decided he would say what he thought and use ex-son-in-law mobile's resources to prosecute. mortgage corporate executive,
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even if they had that personal conviction would not have acted as aggressively as he did. the book reflect -- i interviewed raymond, and if asked him at one point, so you could have handled the cost of modest carbon pricing legislation, right? look at your cash from the look at your profitability. why resist it? you have adapted to air pollution regulations, adapted to spill regulations, you run -- you pride yourselves on your compliance with regulatory regimes that impose costs on you for making the oil industry sustainable in a political sense. why not just adapt to these regulations. i found his answer not that convincing. he sort of said we thought the costs on the whole economy was too great. would break up america's economic process and so forth. but there was a visceral reaction to quioto that exxonmobil had that was kind of out 0 of line with their
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business interests. i understand if you're a coal company and you see a price on carbon coming. this could be ex- -- they had an opportunity to adapt to this in a more forward way, and frank through the european companies saw that and their publics were already there and they moved with much more adeptness, i thought. >> host: now, another yesterday found really interesting in the book, that you raise a couple times, at least twice, that i can remember -- you're not hearing it at all right now in washington with these gasoline prices. is regulating gasoline prices like we do electricity and how electricity -- we all want the lights on, and how we regulate that baas it got out of control and prices soared, people wouldn't be able to turn the lights on. why aren't we hearing that more when it comes to gas, and
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shouldn't shoo we be hearing it more as a solution -- something the government could do? >> guest: i think this is a very serious question, and the reason we don't hear more about it is because in fact the political arguments during campaign season about gas prices are theater. there's no serious argument so no reason to bring a serious policy question into em. the. the point you make is important. you flip on a switch and you generate power and a company profits from that use of power. that company is the utility that is regulated by a public interest standard in every state or jurisdiction, separately but the public interest standard there is, and that's our history with the provision of electricity. we think it's so important and inescapable we require the profitable companies to meet certain public interest standards and be accountable to the public for their performance, and we tax their profits often. now, in exxonmobil's case, they're a global company.
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they're out discovering oil under ice and in seas and so forth. nobody is going regulate them in the public interest in that sphere. but in the provision of gasoline, it is a similar utility function, and in fact if you're a commuting construction worker who has to drive 60-miles a day in your pickup truck to a job site, you go to the pump you have no choice. you have to put it? whatever price is there and you account understand why you have no accountable and no control over that kind of track that you're in. and i think it's a serious -- it's an accident of history that we treat the provision of gasoline as an entirely free market function without any public interest oversight, basically, from taxes, and from environmental regulations. but we treat public electricity as a -- electricity as a public utility in many other countries they organize things differently. i don't know there's any easy way to fix this but exxonmobil's unpopularity arises from the fact that their
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brand name is on these pumps. they deliberately try to put their customers in pain while they're looking at their brand. >> host: that's the only way they're viz -- visible. outside people wouldn't understand the process. seeing them make holes in the ground and all we see of them is the tiger in the tank, and their brand name. >> guest: there's a board meeting described in there when lee raymond, toward the end of his career, says to the board, for all the reasons you just listed, why don't we just get out of the gasoline business? tike take our doons -- do like dupont. nobody says dupont is evil but they're a huge industrial corporation. it's invisible by comparison. >> host: one other point you make later in the book -- and it's in reference to the discussion about energy policy and kind of the lack of u.s.
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policy or at least a coherent one -- that exxon is the u.s. policy -- that politicians -- at the end of the day it requires a public to make some sacrifice. and they really don't want to stop there they don't want to good there once you go there, people start to say, hey, i don't want to do that. every poll we have done in the "associated press" on energy says we want to reduce the rfk of climate change and we want clean air but we don't want to have our electricity bills to do that. which is a consequence of any kind of market change and also a consequence of the carbon tax. that dribble trickles down to the consumer and changes habits. that turns the tables a little bit. seems to me that our inability as the public to make sacrifices makes us more of beholding to companies we don't like. >> guest: right.
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there's truth in that. and it's interesting, i was trying to think about this question of this price that people would have to pay to address climate change in particular, and no public in any era wants to volunteer for higher prices in their household expend kit tours. our politic shows that where the public saw a threat -- itch they thought their children were more likely to get asthma or develop respiratory disease because of air pollution that was unaddressed or their children were likely -- more likely to be exposed to cancer as a result of pollution in water supply, that people are willing to pay a price, whatever the price was, to protect their living generation from that danger. the problem with climate is it's over the horizon and the dangers aren't serious but abstract. contract so you may be motivated to think i don't want to put my grandchildren in a world where
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it's 3 degrees celsius higher than we have no and risingsing seas. but it's not the same. so the cost benefit equation is part of the problem. and the other thing about what you observed is that there isn't a government in the world where politicians don't want to make glen as cheap as possible. it's like bread and circuses. it's two chickens in every pot. most of the world's governments oversubdies glen just so they don't have to deal with the public's anger about what the gas would really cost if they let marks prices rule. so so here we led market prices rule and then add taxes for reef mediate environmental costs and reduce driving so it's expensive already. and you go to politicians and say i have a plan to make gasoline even more expensive, and you're not going to find a pick caucus lining up for that. >> host: that quote from obama somewhere in california where he says that as a result of cap and
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trade, gasoline didn't necessarily skyrocket. that has been recycled. he was being honest. has to go up with you put a price on carbon. but that has come back to bite him over and over and over again. on subsidies. let's talk about that, subsidizing gasoline. lee raymond has a disdain for the crutch that renewables need to be economic and exxonmobil was company who seems to loathe any kind of crutches. unless they want them for their own. >> host: so the crutches that oil has, a huge debate in congress, and the president is pushing to end tax breaks that oil companies have enjoyed, and they make these enormous profits, why should they continue to have them. did that come in your conversation with raymond at all? pointing out a little bit of hypocrisy there.
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>> guest: i seal this stale made around the subsidies question. i don't feel like i quite know what to think about it. basically there are some tax breaks that oil companies alone get about how the oil industry in specific terms, but most of these allowances are manufacturing allowances. they just happen to be manufacturers of gasoline as opposed to tractors or something else. and so, okay, we can say, let's discriminate against the oil industry because they're making too much money and people are paying too much for gas. eliminate the subsidies and rebate to drivers drivers who ho drive to work. that's reasonable public policy. but to just say these are subsidies only for the oil industry? i'm not sure that actually even correct. i don't know what the -- i know it's great politics. i get that. explains the reason why this keeps hang because it's great politics and there's no danger of these laws actually passing. so you can say whatever you want
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about them. but i think it's a serious question as to how you should restructure american energy policy, i'm all for imposing greater cost on exxonmobil and they should be doing more to facilitate a national energy policy goal of addressing the serious risk office global warming by moving as rapidly and economically as possible to a new energy mix. i don't think that stripping out manufacturing sub days and then not repurposing those funds to achieve that goal is necessarily very persuasive. so i think the first thing to do is put a price on carbon, and put i it in a substantial and predictable way so that all companies can respond to it and we can get moving in the direction we need to go. >> host: we have a few more minutes and i have to get to canada. i found the canadian section interesting. again, in light of the modern events. it's very clear from what you
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write that prior to keystone xl, exxon was infewerrated with the u.s. approach to canadian imports. because of the -- as you and i both know, energy intensive to distract huge amounts of green house gas emissions in the extraction process. but now the keystone -- that was right to the heart of that. the obama rejects keystone pipeline. others are furious because of the climate change issues. i'm assuming you would conclude that exxon is also is a furious as it was back then. >> guest: oh, yeah. they don't quite know what to do about the politics of the keystone pipeline. in their book it is so irrational that they -- they almost can't overcome their own sort of indignity about how
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disconnected politics of the pipeline is from the underlying questions of climate change regulations, that their roll in that and the global oil market. thesteen pipeline is a continuation of the things that made them mad earlier. >> host: absolutely. the same thing. >> guest: trying to attack the problem -- look, even the environmentalists would admit, i'm sure, that if they could enact universal price on carbon as the basis for addressing climate change and the danger office global warming, they would. failed to do that and couldn't get a bill in congress. so they're trying to look for opportunities to call attention to the problem and keep challenging the status quo. so they have chosen this because it's available, not because it's their preferred solution to global warming. but they made it an example, and
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basically they're trying to leverage the unpopularity of pipelines in general, and the, not in any backyard politics, common in the united states to keep this issue moving. and from canada's perspective, i'm sure it's aggravating. from the oil industry's betive, definitely aggravating because it's a pipeline that would otherwise make economic sense is being punished for a campaign reason, not because of some policy framework. and i mean, the truth is that if keystone isn't built -- ill it will be built, i think, as soon as the electiones over, either president obama will reverse the judgment he made to get himself through the campaign, or the romney administration will build the pipeline. that's my -- that and three dollars can get you a cup of coffee at starbucks. even if keystone weren't built the canadians would export it to china. it's actually not that big a deal for them.
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>> host: the greenhouse is going to happen either way. >> guest: unless canada changes its policy towards the sands. >> host: thank you very much. i enjoyed the conversation, and congratulations again on the book. >> guest: thank you very-very much.
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